What FEMA Covers for NRI Property
FEMA (Foreign Exchange Management Act, 1999) is the law that regulates cross-border money movements for Indians. For NRI property investment, FEMA determines: what you can buy, how you can fund the purchase, how you can pay EMIs, and how you can repatriate proceeds when you sell.
What NRIs Can Buy (Permitted Properties)
**Residential properties:** Freely permitted. No ceiling on number of properties. NRIs can buy apartments, houses, and residential plots.
**Commercial properties:** Permitted. Office space, shops, warehouses — all allowed.
**Agricultural land, plantation property, farm house:** NOT permitted for NRIs without specific RBI approval. This is the most common source of confusion — NRIs cannot directly purchase agricultural land. If agricultural land is converted to residential use and DTCP-approved as a residential layout, it may be purchased. Verify conversion documentation carefully.
How NRIs Can Fund the Purchase
**From NRE account:** Freely repatriable — money brought to India in foreign currency. Using NRE funds: repatriation on sale proceeds is unrestricted.
**From NRO account:** Indian income earned and parked in India. Repatriation from NRO is capped at USD 1 million per financial year, subject to tax clearance.
**Home loan from Indian bank:** Permitted. Repayment must come from NRE/NRO or direct remittance from abroad.
**Gift from resident relative:** Permitted for purchase. But the gift itself must be properly documented and reported.
What You Cannot Do Under FEMA
Practical Compliance Checklist
1. All payments from NRE or NRO account with clear references 2. Property in your name or joint names (not benami in someone else's name) 3. TDS deducted by buyer at appropriate rate on sale 4. Form 15CA/15CB filed before repatriation 5. ITR filed in India for year of sale 6. Keep all records for 7 years (IT scrutiny limitation period)